Lilliputians encircle the Gulliver of IPR: Part II, Nettwerk and BNL

Fundamentally, Terry McBride and gang at Nettwerk, having already challenged a number of traditional models in the music business, now go a step further. Put the album up for sale on MySpace. Give people the tools to play with it, remix it “their” way, do what they like with it. Encourage them to upload their remixes. And get the original band to comment on them. Co-creation.

“The labels were never in the business of selling music,” says David Kusek, vice president of Boston’s Berklee College of Music and coauthor of The Future of Music. “They were in the business of selling plastic discs.”

Musicians generally make very little from the sale of their records. The costs of production, marketing, and promotion are charged against sales, and even if they go multiplatinum and cover those costs, their cut of any extra revenue is usually less than 10 percent. On top of this, the labels typically retain the copyrights to the recordings, which allows them to profit from the musicians’ catalogs indefinitely.

“The future of the business isn’t selling records,” McBride says. “It’s in selling music, in every form imaginable.”Â

….the new model frees him and his artists from the overgrown bureaucracy of the music industry, and that means more money for everyone. He can book tours, sell ringtones, peddle songs to advertising agencies and, yes, give away free downloads without any of the complex, multiparty negotiations that once gummed up the works. “It used to take months to sell a frickin’ ringtone to Bell Canada,” McBride says. “With BNL, one phone call gets the job done.”

“What other business splits up its key assets and sells them to separate businesses that wind up in conflict with each other?” asks Duncan Reid, a venture capitalist who now helps run UK-based Ingenious Music.

Read the article for yourself. And see why changes are necessary, and why people like Terry McBride and BNL and Nettwerk do what they do.